Core Insights - The new energy vehicle (NEV) market in China is experiencing rapid growth, with a projected retail sales increase of 5.5% in 2024, reaching 22.89 million units, and NEV retail sales expected to grow by 40.7% to 10.89 million units, achieving a penetration rate of 47.61% [1][4] Group 1: Market Dynamics - The growth in the NEV market is driven by policies such as trade-in and scrappage incentives, which stimulate sales [1] - Domestic brands like Li Auto, NIO, and Hongmeng Zhixing dominate the mid-to-high-end NEV market, leveraging the demand for natural leather materials in vehicle interiors [1][2] Group 2: Company Performance - Hongxing Automotive Leather has successfully gained supplier qualifications from major brands like Li Auto and NIO, enabling bulk supply of automotive interior leather [2] - The company reported a 20.22% revenue increase in its automotive interior leather business for 2024, reaching 720 million, with a gross margin improvement of 4.43 percentage points to 34.34% [4] - The subsidiary Hongxing Automotive Leather achieved a net profit of 149 million, a 50.98% increase year-on-year, driven by sales growth and improved gross margins [4] Group 3: Competitive Advantages - The company possesses a full-process leather manufacturing capability, allowing for effective resource integration and strong bargaining power in raw material procurement [3] - Hongxing Automotive Leather's involvement in the early design stages of new vehicle models enhances its ability to meet customer demands for high-quality leather materials [3] Group 4: Future Outlook - The company is well-positioned to benefit from the high-end automotive interior trend, with expectations for rapid growth in production and sales [2][4] - The acquisition of Hongxing Automotive Leather allows the company to capitalize on the burgeoning NEV sector, potentially establishing a second growth curve [5]

Investment Rating - The investment rating for the company is "Accumulate" with a downward adjustment [5][4]. Core Views - The company continues to advance its automotive interior leather business, with a focus on expanding production capacity in Indonesia and Vietnam [2][4]. - The financial performance for Q1 2025 shows a revenue of 600 million, a year-on-year increase of 5%, but a significant decline in net profit attributable to shareholders, down 45% year-on-year [1][4]. - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, with an expected payout of 40 million, resulting in a payout ratio of 31% [1]. Financial Performance Summary - For the full year 2024, the company reported a revenue of 3 billion, a year-on-year increase of 9%, and a net profit attributable to shareholders of 140 million, down 24% year-on-year [1][4]. - The revenue breakdown for 2024 shows that leather for shoes and bags generated 2 billion, accounting for 68% of total revenue, while automotive interior leather contributed 700 million, representing 24% of total revenue [2]. - The gross margin for automotive interior leather improved by 4 percentage points year-on-year to 34% [2]. Profit Forecast Adjustments - The profit forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [4]. - The earnings per share (EPS) estimates have been revised to 0.5, 0.6, and 0.8 yuan for 2025-2027 [4]. Market Position and Growth Potential - The company has successfully entered the supply chains of international sports brands such as Adidas and COLEHAAN, indicating strong market positioning [2]. - The overseas revenue increased by 97% year-on-year, highlighting the potential for growth in international markets due to the investment in production capacity in Southeast Asia [2].

Core Viewpoint - The report by Tianfeng Securities on Xingye Technology highlights the company's ongoing development in the automotive interior leather business, maintaining a "buy" rating for the stock [1]. Financial Performance - For Q1 2025, the company reported revenue of 600 million, a year-on-year increase of 5%, while net profit attributable to shareholders was 20 million, down 45% year-on-year [1]. - In Q4 2024, revenue was 900 million, up 24% year-on-year, with net profit attributable to shareholders at 30 million, a significant increase of 150% year-on-year [1]. - The full year 2024 saw revenue of 3 billion, a 9% increase year-on-year, but net profit attributable to shareholders decreased by 24% to 140 million [1]. Dividend and Management Changes - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, amounting to an expected payout of 40 million, with a dividend payout ratio of 31% [2]. - Wu Meili resigned as the board secretary but continues as the vice president, while Zhang Liang has been appointed as the new board secretary [2]. Product Segmentation and Market Expansion - Revenue from leather for shoes and bags in 2024 was 2 billion, an 8% increase, accounting for 68% of total revenue, with a gross margin of 18% [3]. - Revenue from automotive interior leather reached 700 million, a 20% increase, representing 24% of total revenue, with a gross margin of 34% [3]. - The company has successfully entered the supply chains of international brands such as Adidas and COLEHAAN [3]. Regional Performance - Revenue from East China was 1.9 billion, an 8% increase, accounting for 65% of total revenue, with a gross margin of 22% [3]. - Revenue from South China was 600 million, down 1%, representing 21% of total revenue, with a gross margin of 22% [3]. - International revenue surged by 97% to 300 million, accounting for 10% of total revenue, with a gross margin of 21% [3]. Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51% year-on-year, driven by increased sales and improved gross margins [4]. - Lianhua Leather reported a net loss of 10 million, down 62% year-on-year, primarily due to increased financial expenses [4]. Profit Forecast Adjustments - The profit forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [5]. - Earnings per share (EPS) are projected to be 0.5, 0.6, and 0.8 yuan for 2025, 2026, and 2027 respectively [5]. - Price-to-earnings (PE) ratios are expected to be 20x, 16x, and 12x for the respective years [5].

Financial Performance - In Q1 2025, the company reported revenue of 600 million, a year-on-year increase of 5%, with a net profit attributable to shareholders of 20 million, down 45% year-on-year, and a non-recurring net profit of 20 million, down 49% year-on-year [1] - For Q4 2024, the company achieved revenue of 900 million, a year-on-year increase of 24%, with a net profit attributable to shareholders of 30 million, up 150% year-on-year, and a non-recurring net profit of 30 million, up 21% year-on-year [1] - The total revenue for 2024 was 3 billion, a year-on-year increase of 9%, with a net profit attributable to shareholders of 140 million, down 24%, and a non-recurring net profit of 130 million, down 26% [1] Dividend and Management Changes - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares (including tax), expecting a total payout of 40 million, resulting in a payout ratio of 31% [2] - Wu Meili resigned as the secretary of the board but continues to serve as the vice president, while Zhang Liang has been appointed as the new secretary of the board [2] Product Performance - Revenue from leather for shoes and bags in 2024 was 2 billion, a year-on-year increase of 8%, accounting for 68% of total revenue, with a gross margin of 18%, down 2 percentage points [3] - Revenue from automotive interior leather was 700 million, a year-on-year increase of 20%, accounting for 24% of total revenue, with a gross margin of 34%, up 4 percentage points [3] - Revenue from second-layer leather collagen products was 100 million, down 1% year-on-year, with a gross margin of 10%, down 2 percentage points [4] Regional Performance - Revenue from East China was 1.9 billion, a year-on-year increase of 8%, accounting for 65% of total revenue, with a gross margin of 22%, up 1 percentage point [5] - Revenue from South China was 600 million, down 1% year-on-year, accounting for 21% of total revenue, with a gross margin of 22%, down 2 percentage points [5] - Revenue from overseas markets was 300 million, a year-on-year increase of 97%, accounting for 10% of total revenue, with a gross margin of 21%, up 5 percentage points [5] Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51% year-on-year, attributed to increased sales and improved gross margin [6] - Lianhua Leather reported a net loss of 10 million, down 62% year-on-year, primarily due to increased financial expenses and exchange losses [6] Profit Forecast Adjustment - Based on the performance in 2024 and Q1 2025, the company has adjusted its profit forecast for 2025-2027, expecting net profits attributable to shareholders of 150 million, 180 million, and 230 million respectively [7] - The earnings per share (EPS) are projected to be 0.5, 0.6, and 0.8 yuan for 2025-2027 [7]

Investment Rating - The investment rating for the company is "Accumulate" with a downward adjustment [5] Core Views - The company continues to advance its automotive interior leather business, with a focus on expanding production capacity in Indonesia and Vietnam [2][4] - The company reported a revenue of 600 million in Q1 2025, a year-on-year increase of 5%, while the net profit attributable to shareholders decreased by 45% to 20 million [1] - The company plans to distribute a cash dividend of 1.5 yuan per 10 shares, with an expected payout of 40 million and a payout ratio of 31% [1] Financial Performance Summary - For the full year 2024, the company achieved a revenue of 3 billion, a year-on-year increase of 9%, with a net profit of 140 million, down 24% [1] - The revenue from leather for shoes and bags was 2 billion, up 8%, accounting for 68% of total revenue, while automotive interior leather revenue was 700 million, up 20%, accounting for 24% [2] - The gross margin for automotive interior leather improved by 4 percentage points to 34% [2] Subsidiary Performance - The subsidiary Hongxing Automotive Leather reported a net profit of 150 million, up 51%, attributed to increased sales and improved gross margin [3] - The subsidiary Lianhua Leather reported a net loss of 10 million, down 62%, due to increased financial expenses and exchange losses [3] Earnings Forecast - The earnings forecast for 2025-2027 has been adjusted, with expected net profits of 150 million, 180 million, and 230 million respectively [4] - The EPS for 2025-2027 is projected to be 0.5, 0.6, and 0.8 yuan respectively [4]